{"id":817656,"date":"2025-03-24T13:31:52","date_gmt":"2025-03-24T11:31:52","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=817656"},"modified":"2025-03-26T08:44:15","modified_gmt":"2025-03-26T06:44:15","slug":"how-to-legally-pay-less-tax-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/817656\/how-to-legally-pay-less-tax-in-south-africa\/","title":{"rendered":"How to legally pay less tax in South Africa"},"content":{"rendered":"\n

With South Africans expected to face higher taxes in 2025, a financial expert has stressed the importance of taking advantage of simple methods to minimise the amount of money they pay to SARS.<\/p>\n\n\n\n

These include paying into retirement annuities, taking advantage of tax-free savings accounts, claiming back the medical aid tax credit, deductions from donations to Public Benefit Organisations and double-checking your employer is paying the correct PAYE.<\/p>\n\n\n\n

After initially planning marginal adjustments to income tax brackets in the original budget in February, the National Treasury has opted for no adjustments in the revised budget.<\/p>\n\n\n\n

This means that taxpayers will fall prey to inflationary bracket creep. Finance Minister Enoch Godongwana had to implement this trade-off to cover for a heavily reduced VAT hike in the country.<\/p>\n\n\n\n

In addition to personal income tax brackets, rebates and medical tax credits also received no adjustments for inflation. <\/p>\n\n\n\n

These measures will raise R28 billion in additional revenue in 2025\/26 and R14.5 billion in 2026\/27. The personal income tax proposals, effective 1 March 2025, are expected to raise R19.5 billion in revenue.<\/p>\n\n\n\n

However, while bracket creep doesn’t seem significant, independent data analyst Pieter Jordaan showed<\/a><\/strong> how much more South Africans are actually paying over the past three years.<\/p>\n\n\n\n

In 2023, the tax threshold\u2014the point at which salary earners must start paying tax\u2014was raised to R96,000 per year.<\/p>\n\n\n\n

Adjusted for inflation, using 2015 as the base year, this threshold should be R119,000 in 2025. Instead, it is stuck at R96,000, already below inflation in 2023.<\/p>\n\n\n\n

This will result in all salaried workers paying between 7% and 38% more tax in 2025 compared to 2015<\/strong>, with lower earners being hit the hardest.<\/p>\n\n\n\n

Those earning R15,000 a month would have seen their effective personal tax rate climb from 6.1% in 2015 to 8.4% in 2025.<\/p>\n\n\n\n

Wealthier taxpayers earning over R120,000 a month would have seen their effective personal income tax rates climb from 30.6% in 2024 to 32.8% in 2025.<\/p>\n\n\n\n

The picture gets even bleaker when comparing the effective tax rates over the last 10 years when the revised 1%pt increase in VAT over the next two years is included. <\/p>\n\n\n\n

When factoring in VAT, Jordaan noted that the tax rate for those earning R15,000 increased to 22.6% from 19.2% in 2015, while the burden for top earners rose from 40.3% to 43.2%.<\/p>\n\n\n\n

How to pay less tax <\/h2>\n\n\n
\n
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Momentum Financial Planning executive financial adviser JJ van Wyk<\/em><\/figcaption><\/figure><\/div>\n\n\n

As South Africans brace for new tax pressures, there are several ways to legally reduce tax liability and make the most of available benefits. <\/p>\n\n\n\n

According to Momentum Financial Planning executive financial adviser JJ van Wyk, proactive planning is key. “A little preparation now means fewer surprises later and a more rewarding tax outcome,” he said.<\/p>\n\n\n\n

One of the most effective ways to reduce taxable income is by maximising retirement savings. Contributing to a retirement annuity (RA)<\/strong> or pension fund not only secures your future but also provides significant tax deductions. <\/p>\n\n\n\n

“You can deduct contributions of up to 27.5% of your taxable income, capped at R350,000 annually, which reduces your taxable income and boosts your savings,” van Wyk explained.<\/p>\n\n\n\n

He added that medical aid tax credits<\/strong> are another valuable tool for reducing tax liability. If you pay for medical aid, you may qualify for tax rebates under the Medical Schemes Fees Tax Credit. <\/p>\n\n\n\n

“SARS allows a fixed monthly rebate per member and dependant, lowering your overall tax burden,\u201d said van Wyk.<\/p>\n\n\n\n

\u201cHowever, ensure you\u2019re the one benefiting from the tax credit, as some employer contributions may already factor this in.\u201d<\/p>\n\n\n\n

Many taxpayers also overlook eligible deductions that can lead to significant tax savings. Van Wyk highlights donations to Public Benefit Organisations (PBOs<\/strong>) as a prime example. <\/p>\n\n\n\n

“You can donate up to 10% of your taxable income and claim a deduction, provided the charity has a valid Section 18A certificate,” he added. <\/p>\n\n\n\n

Other deductions include home office expenses (if applicable) and qualifying travel costs, which, if properly documented, can further reduce taxable income.<\/p>\n\n\n\n

Van Wyk advised employees paying tax through the Pay-As-You-Earn (PAYE) system to ensure their employer deducted the correct amount throughout the year. <\/strong><\/p>\n\n\n\n

“This ensures you\u2019re not overpaying or underpaying tax, which could lead to unexpected liabilities,” said van Wyk. Reviewing PAYE calculations regularly helps avoid costly surprises when filing tax returns.<\/p>\n\n\n\n

Investment tax efficiency is another crucial aspect to consider. Interest income, dividends, and capital gains are all subject to tax, so ensuring your investments align with tax-efficient strategies can enhance returns. <\/p>\n\n\n\n

“Tax-free savings accounts<\/strong> offer an excellent way to achieve tax-free growth and withdrawals within set limits,” van Wyk added.<\/p>\n\n\n\n

By understanding and applying these tax-saving strategies, South Africans can legally minimise their tax burden and optimise their financial well-being.<\/p>\n","protected":false},"excerpt":{"rendered":"

An executive financial advisor has shared ways South Africans can pay less tax in 2025.<\/p>\n","protected":false},"author":92,"featured_media":747568,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[21081,853,10183],"class_list":["post-817656","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-momentum-financial-planning","tag-south-africa","tag-the-national-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=817656"}],"version-history":[{"count":9,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817656\/revisions"}],"predecessor-version":[{"id":818209,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817656\/revisions\/818209"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/747568"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=817656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=817656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=817656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}